7/12/13 Notes


AMD long 4.36

Stop level: 1% below 4.32 multi-year tested line – 4.28


Honor Thy Stops

It has been a few too many times now that my trades have gone against me and I didn’t pull the exit trigger, only to see the stock fall further and further. I am then trapped in a bad position and a bad mood for weeks, waiting for the stock to recover so I can feel good about myself as a trader again. In the meantime, I am paralyzed, unable to trade and unable to adapt.

Despite all my practice and research and training that has provided good tactics to make me money, a few bad practices are draining all of my gains and some. So in light of this truth, I have decided to tackle these one at a time. The first: money management, which I am beginning to learn is the skill of utmost importance in trading.

I am deciding today that I will begin to create a system of stop placement that works for me. The stops will be set directly under technical resistance and support points that I will calibrate with experience. They will be soft stops not hard ones. My pain threshold will be 1% below the technical level and after that I will dutifully exit the position. My goal is to lose less than 2% on the trade while my upside is unlimited.

To hold myself accountable I will keep a journal of all my entry/exit points and corresponding stop levels here on this blog.